George Osborne used the spending review to talk up the role of science and innovation in driving growth. Photograph: Pa Wire/PA

Vince Cable's determination to hold his ground against George Osborne fuelled a lot of speculation about science and innovation spending ahead of today's spending review. Would the Medical Research Council's budget be shifted to the Department of Health? Would there be any fresh capital investment in science? Would the UK's embryonic innovation agency, the Technology Strategy Board, get a further boost as part of a more active industrial policy?

Now the verdict is in. In his speech on Wednesday, Osborne emphasised three principles – reform, growth and fairness – and talked up the role of science and innovation in driving growth. The science budget – that is, funding for research allocated mainly through the research councils and block grants to universities for research – was "ring-fenced" at £4.6bn per annum in the previous 2010 spending review, to the relief of the research community, which had been braced for significant cuts. However, the capital spend on science was cut drastically – cuts that have been partially but not entirely reversed since then. On Wednesday the chancellor confirmed that the ring-fenced science budget would be maintained, and capital spending on science boosted.

Of course, a frozen science budget is, in reality, a declining one. And just the prospect of greater competition for funding pushes actors in the science base to make short-term decisions that can have long-term impacts. And at the end of the day, this is a one-year spending round. With a general election expected in May 2015, attention will now shift to the prominence given to research and innovation in the manifestos and spending plans of the three main parties.

Long before then, we will know the outcomes of the ongoing Triennial Reviews of the Research Councils and the Technology Strategy Board. Could major structural changes be on the cards? We'll have to wait and see.

In the meantime, we have invited a range of commentators on science and innovation policy to offer their first reactions to today's spending round statement and look ahead to what it might mean.

Sir Paul Nurse

Back in 2010 the science community breathed a huge sigh of relief when the spectre of cuts in the spending review largely passed us by. It wasn't great news, as a flat cash settlement meant real terms cuts, but in comparison with many other sectors it was good news. There was also the blow of significant cuts to the capital budget.

In the past few years the government has spoken in increasingly positive terms about science and innovation as the key to long-term, sustainable economic growth. It has also taken pretty much every opportunity to put right the damage done to the capital budget. The mood music at Westminster has also been positive with the parties competing with each other to show their science credentials – a welcome show of cross-party agreement.

So today's announcement of a flat cash settlement for the operational science budget with a further long-term boost to the capital budget is hopefully less a cause of relief and more a cause for confidence for the future. We still have quite a long way to go as both government and business investment in research falls below the level of our competitor economies, but there is reason to believe that we are on the right road.

We must give credit where credit is due. The chancellor, Vince Cable and David Willetts have protected science. The next step must be to nurture our already world-leading capacity with greater investment – and there are signs of that in the capital budget changes announced today. That is how we will make research the engine room for economic growth.Sir Paul Nurse is the president of the Royal Society and a Nobel laureate

Mariana Mazzucato

There are key problems with the spending review and the logic behind it. Firstly, the continued insistence that more cuts are necessary – £11.5bn over the next spending period – is just wrong. There is no need for more cuts in a country that is not facing serious pressure from the financial markets on its deficit (especially one with a central bank that can intervene at any time, making the probability of default almost nil), has its own currency, and is in fact facing increasing pressure, from non-obvious sources like the IMF, for its lack of growth. And since growth is the denominator of debt/GDP, even though the government is trying to cut its debt, the ratio rises due to the low denominator.

And what is causing the low growth of the denominator? Most macro and micro economists will agree that spending in key areas like education, human capital formation, skills, research and development (public and private), as well as health care, are key to future growth in the long run. It is simply not true that these areas are being ring-fenced. The Campaign for Science and Engineering has revealed the "real" fall in the science budget to be about 12% (with initial cuts being now filled back in but not enough to control for inflation) at a time when our key competitors are increasing it by at least that same amount.

And anyone like myself who has kids in state schools knows full well how cuts in locally funded after-school programmes and libraries affect the most vulnerable in society – making it harder, not easier, for people to find work and stay in work. All this is continued bad news for the denominator of debt/GDP, making the numerator almost meaningless.

Mariana Mazzucato is R M Phillips Professor of Science and Technology Policy at the University of Sussex, and author of The Entrepreneurial State (@mazzucatom)

Luke Georghiou

The settlement is close to the upper limits of expectations of research-intensive universities and we should gracefully acknowledge the argument put by Cable and Willetts and accepted by the Treasury. The upfront linkage of support for science with growth is central to that case. It means that the "impact agenda" will be with us for the foreseeable future.

Maintaining resource funding in cash terms continues the real-terms decline but the restoration of capital funding is genuinely good news. The drastic initial reduction followed by intermittent short-term announcements of availability of new funds did perversely have some benefits, including stimulation of arrangements for sharing equipment and the ability to make swift and bold decisions. Both look set to survive, with the Research Partnership Investment Fund continuing to leverage private funding, but the real hope here is that the low-to-mid-range infrastructure on which the majority of research depends can be put back into balance and that a planned approach can replace hasty responses. Universities will also welcome the positive treatment of ecosystem partners, notably the Technology Strategy Board. It is positive to see that postgraduate funding is on the radar and linked to students from disadvantaged backgrounds. Other parts of the Review await interpretation. Reprioritisation of teaching grant spend could be a reference to cuts for Widening Participation. Reduced spending on administration is also significant. Research funders will have less ability to process grant applications and will be driven still further towards devolving that workload to universities, both by demand management and by giving fewer, larger and longer grants. Luke Georghiou is Vice-President for Research and Innovation at the University of Manchester and Professor of Science and Technology Policy and Management at the Manchester Institute of Innovation Research (@lukegeorghiou)

Sarah Main

The Chancellor has claimed that he is 'up for the challenge of making the UK the best place in the world to do science'. Today's announcements alone will not achieve that goal. We now urge government to set an upward trajectory for long-term investment in UK science and engineering for the next Spending Review. In the long term, 'flat cash' will not be sufficient. We applaud the Chancellor's ambition for science and engineering, and are heartened by the efforts made to protect science in the face of deep departmental cuts across the board. But the commitments made today pale in comparison to those made by leaders of our partner nations who are investing heavily in science and research for economic growth. The risk of sliding down the global 'premier league' of scientific nations is not simply one of pride, but of real economic cost in losing the 'spillover' benefits of competing with the big guns. The Chancellor's announcement of additional capital is welcome. However, anyone who has been frustrated by working in a lab where new equipment falls into disuse due to lack of maintenance or upgrades will know the pitfalls of capital investment without investment in staff and running costs. With a flat-cash science budget, research organisations will find it increasingly hard to find the money to maintain their new equipment. To make the most efficient use of additional capital, the government must ensure that it is supported by parallel investment streams for recurrent costs. And government investment in UK science and research is far broader and greater than the ring-fenced science budget. Today a number of research-intensive departments saw deep cuts to their departmental budgets. We wait to see how departmental spend on R&D is affected by the settlements for areas like transport, defence, environment and energy. Sarah Main is Director of the Campaign for Science and Engineering (@sciencecampaign)

Rebecca Willis

Today's Spending Review is unfortunate timing for any government wanting to be seen to be green. It comes just a day after Obama's impassioned plea to America to "convince those in power to reduce our carbon pollution. Push your own communities to adopt smarter practices. Invest. Divest." And the stock market reaction – renewables up, coal down – said it all.

It's a long time since we've seen any leading UK government figures being so unequivocal about the need for action. Not surprising, then, that the government's own advisers, the Committee on Climate Change, are saying – in a report launched today – that the UK is in danger of missing its statutory carbon targets within the next few years. Equivocation and watered-down policy has damaged confidence in low-carbon investment.

There are some crumbs of comfort in Osborne's words today. At the risk of generalising, investment in the science base and in innovation – especially the applied innovation of the TSB and Catapault Centres – will be good news for new low-carbon technologies and systems. And we do now have a Green Investment Bank – even if it can't yet borrow.

But set this against the woes of Defra and DECC – both Whitehall minnows ill-prepared for further budget cuts – and, crucially, the lack of any Tory consensus on the environment, and the picture doesn't look rosy. Conservatives are split about the merits of low-carbon investment – indeed, for truly unfathomable reasons, they are split about the science of climate change. Against this backdrop, there is unlikely to be a huge amount of investment in the good stuff – or divestment from the bad. Both the economy and the environment will suffer as a result.

Rebecca Willis is an independent researcher, adviser to the Lake District National Park Authority and a council member of the Natural Environment Research Council (@bankfieldbecky)

Stian Westlake

Today's Spending Round marks another step in the Government's gradual conversion to activist innovation policy. Back in 2010, innovation policy followed robustly Thatcherite lines. Science funding was protected (in cash terms at least) and tax breaks doled out to entrepreneurs. The implication was that the invisible hand would take care of the rest. The Technology Strategy Board, the public body that co-funds technology development by businesses, had to put up with a certain froideur from some at the centre of government. It wasn't seen as close enough to the cool kids of Shoreditch's Internet start-ups, at a time when Tech City was all the rage in Downing Street. And of course, it was a quango, a New Labour creation no less, at a time when that elicited suspicion. This was a mistake. Like it or not, if Government wants to help turn research into winning business ideas at scale, the TSB is the only game in town. To their credit, thanks in no small part to the judgment of David Willetts and Vince Cable, the Government has now realised this. As a result, the TSB is seeing a £185m budget increase (superficially this looks like a 19% boost to its 2014-15 settlement, although some portion of this may represent the continuation of programmes that would otherwise have been cancelled, like the Biomedical Catalyst), on top of another increase last year, and a sizeable increase to innovation procurement budgets (which the TSB helps run). It was interesting to see this money classified as "infrastructure" in the Spending Round report, perhaps a recognition of its importance to economic growth. All this is great news. But before we break out the champagne, it's worth remembering how our spending in this area stacks up internationally. TEKES, the TSB's equivalent in Finland, long considered a poster-child for innovation and technology, invests around €600 million each year, in an economy a tenth the size of ours. Today's announcement was welcome, but there's still a way to go.

Stian Westlake is executive director of policy and research at NESTA, the UK's foundation for innovation (@stianwestlake)

Philip Moriarty

With local government facing the deepest cuts since the Second World War, sweeping pay cuts for millions of public sector workers, and tweets like "Seems Wonga is gonna be the major beneficiary" circulating on the interwebs, I am intensely aware that it would appear to be rather churlish of scientists to complain about the outcome of the spending review on the science budget. But although we can indeed breathe a small sigh of relief – one need only look at the sharp downward adjustments of the budgets of other areas of government to realise how bad it could have been – it's certainly not all good news. The capital spend is one thing and, of course, welcome (although quite whether the boost in funding is as large as Osborne would have us believe is moot). The Chancellor's announcement of a continued flat cash settlement for science resource is immensely worrying – we've already suffered a substantial loss in the amount of science funding due to the freeze put in place in 2010. Despite Osborne's warm words about the cultural and economic value of scientific research, the spending review is certainly not going to enhance our ability to compete on the world stage. And, of course, the big question of just how the science budget will be divvied up between the research councils and the other funding bodies which fall under the BIS 'umbrella' is yet to be addressed and looms large. Even if the axe didn't fall on the so-called 'quality-related' component of the funding for higher education institutions, there remains scope for potentially seismic changes in just how the BIS budget is distributed amongst HEFCE and the research councils.

Philip Moriarty is a Professor of Physics and an Engineering & Physical Sciences Research Council Fellow in the School of Physics and Astronomy, University of Nottingham

Dave O'Brien

The electioneering aspects of the spending review apart, there are three points that stand out: the public sector pay freeze, the talk of transferring research activities to fully ring-fenced departments such as Health and the role of arts and social science in growth. First, the public pay freeze: whilst most researchers fall outside the public sector pay envelope, both research funding agencies and research activities within government (and, in decreasing numbers, local government) need to attract talented staff who have the capabilities to commission and consume research. The danger is that rates of pay will become uncompetitive compared with research roles in the private sector, stripping skills from the infrastructure on which research in the UK depends.

The rumoured shift of medical research and/or education spending to the Department of Health may have failed to materialise, but it will be interesting to see how both AHRC and ESRC priorities maybe effected by the need to find alternative basis for funding beyond BIS.

And the commitment to the budget for the Technology Strategy Board, along with a less severe than expected cut to the Culture, Media and Sport budget, suggests the government is tentatively supporting the creative economy, although this is not one of BIS's industrial policy priority areas. It is clear that the UK needs a new economic settlement and investment in the creative economy will be an important part of that.

Overall the spending review still leaves open the question of the future of arts and social science researchers. Whilst the spending review document commits to improving support for postgraduates from disadvantaged backgrounds by offering a modest fund to HEFCE, this is still woefully short of the comprehensive policy on postgraduate education funding which all three of the main political parties have failed to provide.Dave O'Brien is a lecturer in cultural and creative industries at City University London. He specialises in cultural value and urban cultural policy issues (@DrDaveOBrien)